Retail inflation remains high at 6.26 pc, IIP soars on account of base effect

The marginal slippage in the Consumer Price Index (CPI)-based inflation was noticed despite little firmness witnessed in the food inflation which inched up to 5.15 per cent in June from 5.01 per cent a month ago. 

Retail inflation based on Consumer Price Index (CPI) was 6.3 per cent in May 2021 and 6.23 per cent in June 2020. 

As regards the factory output, the Index of Industrial Production rose sharply by 29.3 per cent in May against a decline of 33.4 per cent in the corresponding month of 2020. 

As per the data released by the National Statistical Office (NSO) on June CPI, the inflation on annual basis in the ‘oils and fats’ segment was 34.78 per cent in June. While the rate of price rise in fruits basket was 11.82 per cent, it contracted in vegetables (-0.7 per cent). The inflation in ‘fuel and light’ segment was 12.68 per cent. 

The RBI has been mandated by the government to keep retail inflation at 4 per cent with a margin of 2 per cent on the either side. The central bank mainly factors in the CPI inflation while arriving at its bi-monetary policy. 

The NSO data revealed that industrial production surged by 29.3 per cent in May, mainly due to low-base effect and good performance by manufacturing, mining and power sectors, but remained below the pre-pandemic level. 

The manufacturing sector -- which constitutes 77.63 per cent of the Index of Industrial Production (IIP) -- grew 34.5 per cent in May this year, as per the data released by the National Statistical Office (NSO) on Monday. 

The mining sector output rose 23.3 per cent in May while power generation increased 7.5 per cent during the same month. 

In May 2021, the IIP stood at 116.6 points compared to 90.2 point in the same month last year. The index was at 135.4 points in May 2019 as per the NSO data. The data showed that industrial production recovered but was still below the pre-pandemic level in May 2019.